I was charged a ridiculous overnight short fee

Discussion in 'Retail Brokers' started by GotherL, Dec 4, 2019 at 8:24 AM.

  1. GotherL

    GotherL

    I shorted ASLN at $5.50 and covered the next day at 2.70 for a $484 profit only to find out Tradezero charged me an overnight short fee of $564. This is absolutely ridiculous.

    Their pricing rules looks like this.
    Hard to Borrow Overnight Shorts 7x market rate cost for 1st night, additional days charged at 1x market rate

    I don't even know what that means. Someone help me understand please...
     
    Last edited: Dec 4, 2019 at 8:29 AM
    remogul92, Nobert and Maverick2608 like this.
  2. zdreg

    zdreg

    Please clarify that you only shorted 100 shares. Was it 200 shares or some other number?
     
  3. GotherL

    GotherL

    I shorted 180 shares.
     
  4. zdreg

    zdreg

    where does the 7x market rate come from?
     
  5. From their website. At least they have always been honest about it. But is is not a healthy business model. Who in their right mind would continue to use them as a broker when they find out that they pay 7 times for day 1, if they missed the information on their website before opening an account.
     
    Last edited: Dec 4, 2019 at 8:58 AM
  6. What I miss in general is a study comparing short borrow rates among brokers. I checked the Bloomberg terminal. It does not carry this data. Of course I could simply open accounts across the board. However, being situated in the EU prevents that.
     
  7. GotherL

    GotherL

    Yeah it's extortion. Beware of this broker. If you shorted 10,000 shares and held it overnight you might end up with fees in the hundreds of thousands.
     
  8. FSU

    FSU

    Was this over the weekend as well?
     
  9. In that case it would only be 7 times for the first day, I assume. That is 7 times for Friday overnight and 1 times regular rate for Saturday and Sunday overnights.

    However, what is meant by "regular rate" is also a shaky concept, I guess, as I assume that is up to the broker to decide.
     
  10. GotherL

    GotherL

    Nope, it was just one day.
    The rate was 0.275.
    I've no idea how that is even calculated.

    So 200 sharesx0.275x7?
    Just a guess.